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The euro is trading firmly above the 1.1900 level against the U.S dollar, ahead of the European Central Bank interest rate decision, and key press conference with ECB President Mario Draghi.

Today's press conference with Mario Draghi will be the main event, as most analysts expect the ECB to keep interest rates unchanged. Investors will look to his thoughts on eurozone inflation, the timing of QE tapering and the recent appreciation of the euro currency.

The EURUSD pair remains bullish on an intraday basis whilst trading above the 1.1918 level. However, EURUSD buyers should remain cautious, as price-action has created a bearish triple top pattern on the charts.

Key technical resistance is located at 1.1950, 1.1979 and 1.2030. A higher time-frame price close above the 1.2030 level, should encourage buying towards 1.2070 and 1.2110

Key technical support for the EURUSD pair is located at 1.1918, and the daily pivot point, at 1.1897. The monthly pivot point is located at 1.1884, with further support at 1.1865 and 1.1823.

Below the former weekly price low, at 1.1823, the euro's 200-week moving average becomes critical support, at 1.1743.

Thursday is another active day in the global financial markets, with monetary policy set to dominate the headlines.

The European Central Bank (ECB) will deliver a highly anticipated policy decision at 11:45 GMT. Although no changes are expected, ECB President Mario Draghi may signal the way forward with respect to quantitative easing. ECB officials are under growing pressure to begin removing policy accommodation following a stellar first half.

However, most analysts seem to agree that Draghi will leave off the QE discussion until next month. But that won’t stop policymakers from deliberating the way forward in the wake of above-average growth and a surging euro.

In terms of economic data, the European Commission will release its second estimate of Eurozone Q2 GDP at 09:00 GMT. The revised estimate is expected to show quarterly growth of 0.6%, unchanged from the initial estimate. This translates into a year-over-year gain of 2.2%.

In North America, the Department of Labor will release its weekly jobless claims report for the period ended September 1. Applications for first-time unemployment benefits are forecast to rise by 5,000 to a seasonally adjusted 241,000. Jobless claims have held below 300,000 for more than two years.

North of the border, Canada will report on building permits at 14:00 GMT.

Earlier in the day, the Australian government said retail sales were virtually unchanged in July, confounding expectations for a 0.3% increase. Australia’s trade surplus also narrowed to $460 million in July form $856 million, separate data showed.

EUR/USD

The euro is trading sideways ahead of the ECB rate announcement. The EUR/USD has traded within a narrow range and is roughly 100 pips below last week’s multiyear high. The fundamentals will drive the pair in the coming hours, with all eyes on Mario Draghi.

AUD/USD

The Australian dollar saw narrow movement after Thursday’s data releases. The AUD/USD was trading roughly 10 pips below 0.8000 during the Asian session. The pair continues to be rangebound, and faces strong support near the 4 September low of 0.7942. On the opposite side of the ledger, the Aussie faces resistance at 0.8028. A clean break above this level could lead to a challenge of the yearly high near 0.8065.

USD/CAD

The loonie’s incredible run reached a new milestone on Wednesday after the Bank of Canada raised interest rates for the second time this year. The USD/CAD exchange rate plunged nearly 200 pips to 1.2232, where it is currently trading at multiyear lows. The sharp decline makes the technical indicators less relevant for the time being, as the market looks to absorb the fundamentally-driven move. For the time being, the USD/CAD is struggling near two-year lows. The pair is capping off its fourth straight bearish month, according to technical analysts.

Key Highlights

• The Aussie Dollar is positioned nicely above the 0.7900 handle area against the US Dollar.
• There is a crucial ascending channel with current support at 0.7950 forming on the 4-hours chart of AUD/USD.
• Australia’s trade balance in July 2017 posted a surplus of 460M, less than the forecast of 875M.
• Australian’s Retail Sales in July 2017 posted no change compared with the forecast of +0.3% (MoM).

AUDUSD Technical Analysis

The Aussie Dollar started a major upside move from the 0.7807 low against the US Dollar. The AUD/USD pair is positioned well in the bullish zone and remains supported near 0.7950.

Looking at the 4-hours chart, there is a crucial ascending channel forming with current support at 0.7950. Both 100 and 200 simple moving averages (H4) are also below the channel support at 0.7930.

Therefore, any major dips from the current levels are likely to find support near 0.7950-0.7930. In the short term, there is a contracting triangle forming with resistance at 0.8020.

The pair recently tested the 1.236 Fibonacci extension of the last decline from the 0.7995 high to 0.7871 low. It suggests that the pair might attempt a downside correction before moving back above 0.8000 in the near term.

The overall trend seems to be bullish as long as the pair is trading above 0.7950-0.7930.

Australia’s Trade Balance and Retail Sales

Today, Australia saw a couple of important economic releases like the trade balance and retail sales (July 2017). The trade balance in July 2017 released by the Australian Bureau of Statistics was forecasted to post a surplus of 875M.

However, the actual result was on the lower side, as the trade surplus was 460M. It was also less compared with the last 856M. Exports of goods and services in July 2017 declined 2%, more than the last -1%. Imports of goods and services in July 2017 declined 1%, compared with the last increase of 2%.

The report added that:

In seasonally adjusted terms, goods and services credits fell $709m (2%) to $31,071m. Non-rural goods fell $631m (3%), non-monetary gold fell $330m (17%) and net exports of goods under merchanting fell $4m (15%). Rural goods rose $97m (2%). Services credits rose $159m (3%).

Moreover, the Retails Sales figures for July 2017 were also published today. The forecast was lined up for an increase of 0.3% in sales compared with the previous month. The actual was disappointing, as there was no change in sales (0%).

Economic Releases to Watch Today

ECB Interest Rate Decision, Monetary Policy Statement and Press Conference.

US Initial Jobless Claims – Forecast 241K, versus 236K previous.

Canada’s Ivey PMI August 2017 – Forecast 61.3, versus 60.0 previous.

In a surprising move on Wednesday, the Bank of Canada raised interest rates by 25 basis points to 1%. The Bank of Canada said the hike “was warranted given unexpectedly strong economic growth in Q2 but future moves are not predetermined and would be guided by data and market developments”. Such a comment could result in further rate hikes before the end of the year. Following the hike, USDCAD fell by over 2%, to trade at 1.21272, a level not seen since June 2015. Now the markets will be closely watching future economic data ahead of a speech by Bank of Canada Governor Stephen Poloz, scheduled for September 27, when he is expected to provide an economic update.

The US Commerce Department released data on Wednesday that showed the US trade gap rising 0.3% to $43.7 billion. The June trade deficit was revised down slightly to $43.5 billion from the previously reported $43.6 billion. The trade deficit increased less than expected in July, as both exports and imports fell, suggesting trade could contribute to economic growth in Q3. However, the effects from Hurricane Harvey, and the impending effects resulting from Hurricane Irma, could significantly impact commodity prices and therefore push up the trade deficit in September.

The market will now focus on today’s ECB Interest rate decision and the statement that follows from ECB President Draghi. The markets are hoping that Draghi may give more clarity on paring the European Central Bank’s bond-buying program, although some market participants are weary that Draghi may warn against the strength of EUR, which has risen 13% this year to date, the strongest performing G10 currency.

EURUSD Gained 0.2% to trade as high as 1.19499 on Wednesday. Currently, EURUSD is trading around 1.1925.

USDJPY made back recent losses to currently trade at 109.00.

GBPUSD continued to hold firm reaching a high of 1.30818 on Wednesday. Currently, GBPUSD is trading around 1.3050.

Gold increased 0.5 percent to $1,342.39, its highest level in a year. Currently, Gold is trading around $1,335.

WTI continued strengthening, reaching a high on Wednesday of $49.66pb, an increase of over 1.5% on the day. Currently, WTI is trading around $49.35pb.

At 10:00 BST, Eurostat will release Eurozone Gross Domestic Product (QoQ) & (YoY) for Q2. Consensus is calling for both data sets to be unchanged: 0.6% for QoQ and 2.2% YoY. As a broad measure of Eurozone economic activity and health the markets will be looking to see an unchanged or better release.

A higher than expected number will see EUR move higher, similarly a lower than expected number will see EUR decline.

At 12:45 BST, the European Central Bank (ECB) will announce its Interest Rate decision. The market is not expecting any rate hike.

At 13:30 BST, The ECB holds a press conference and releases their Monetary Policy Statement. The markets will be listening acutely as to the tone of the comments the ECB makes.

At 16:00 BST, the US Energy Information Administration will release the EIA Crude Oil Stocks change report for August 28th. Consensus calls for a rise to 4.7M from the previous drawdown of -5.392M. Oil has risen, after refineries impacted by Hurricane Harvey are slowly starting to come online, but the threat of Hurricane Irma may cause further shutdowns and therefore affect the price of Oil.

Currency pair EUR/USD

The EUR/USD is building a bear flag chart pattern (blue/red) before the interest rate decision later today in the Euro zone., which will be communicated by the European Central Bank. A break below the support trend line (blue) could confirm a potential ABC correction (red). The ABC correction (red) is invalidated if price breaks above the 138.2% Fib at 1.2165. A break above the resistance trend line (red) could indicate that there is bullish pressure to test the Fib levels of wave B vs A.

The EUR/USD could be building a potential wave 1 and 2 (purple) within wave C (red) and test the Fibonacci levels of wave 2 vs 1 (purple). A break above the 100% Fib level at 1.1980 invalidates it and could indicate that price will challenge higher Fib levels of wave B vs A. A bearish break below support (blue) could start the wave 3 (purple).

Currency pair GBP/USD

The GBP/USD did extend further to the 61.8% Fibonacci retracement level of wave 2 vs 1 (red). This Fib plus the resistance levels of a potential head and shoulders pattern on the daily chart (orange lines) and the top of the bearish channel (red) could act as potential resistance.

The GBP/USD indeed built a wave 4 and 5 (grey) yesterday to the target at 1.3075. Price could build one more bullish extension if it manages to stay above the support levels (green) and break above the resistance zone. The next bullish target could be the 78.6% Fib whereas the next bearish target could be the bottom of the channel (blue).

Currency pair USD/JPY

The USD/JPY again bounced at the support zone (green), which created a bullish channel (red/blue) and broke above the resistance trend line (dotted orange). Price could continue towards the next resistance zone (red) if price can break above local resistance (orange).

The USD/JPY is at a new bounce or break spot with price testing both a support (blue) and resistance (orange) trend line.

USD/CHF - 0.9564

Most recent candlesticks pattern : N/A

Trend                                    : Down

Tenkan-Sen level                  : 0.9571

Kijun-Sen level                    : 0.9562

Ichimoku cloud top                 : 0.9575

Ichimoku cloud bottom              : 0.9571

Original strategy :

Buy at 0.9500, Target: 0.9600, Stop: 0.9465

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9500, Target: 0.9600, Stop: 0.9465

Position : -

Target :  -

Stop : -

As the greenback has continued trading within familiar range, further sideways trading is in store and although initial downside risk remains for weakness to 0.9520-25, if our view that low has been formed at 0.9428 last week is correct, downside would be limited to 0.9500 and bring another rebound later. Above 0.9615-20 would suggest low is possibly formed, bring test of 0.9653-55 resistance, break there would bring another rise to 0.9680 but break there is needed to add credence to this view and extend gain to resistance at 0.9698-99. 

In view of this, we are inclined to buy dollar on further subsequent decline. Below 0.9490-00 would risk weakness to 0.9470 but still reckon downside would be limited to 0.9450 and said support at 0.9428 should remain intact, bring another rebound later.

Global Markets:

• Asian stock markets: Nikkei gained 0.19 %, Shanghai Composite down 0.06 %, Hang Seng rose 0.11 %, ASX 200 fell 0.06 %
• Commodities: Gold at $1340.68 (+0.13 %), Silver at $17.94 (+0.21 %), WTI Oil at $49.05 (-0.22 %), Brent Oil at $54.03 (-0.31%)
• Rates: US 10-year yield at 2.09, UK 10-year yield at 1.01, German 10-year yield at 0.35

News & Data:

• (AUD) Retail Sales m/m 0.0 % vs 0.2 % expected
• (AUD) Trade Balance 0.46 B vs 0.93 B expected
• (CAD) Trade Balance -3.0 B vs -3.2 B expected
• (CAD) Labor Productivity q/q -0.1 % vs 0.9 % expected
• (USD) Trade Balance -43.7 B vs -44.6 B expected
• (CAD) Overnight Rate 1.00 % vs 0.75 % expected
• (USD) ISM Non-Manufacturing PMI 55.3 vs 55.8 expected
• US seeks oil embargo on North Korea, according to a draft UN resolution- AFP
• Oil steady as U.S. refining demand rises but ample crude supplies weigh- RTRS

Markets Update:

Asian equity markets bounced back on Thursday, tracking overnight gains on the wall street. The US Markets gained as investors weighed a deal that ensures the funding of its government through mid-December against persistent geopolitical tensions.

USDJPY is currently seen trading around 109.030. Following a fall of around 0.4 percent against the US Dollar yesterday, the Japanese yen was slightly higher early on Thursday as the pair dropped under 108.90 very briefly before bouncing back to around 109.20.

AUDUSD dropped a few points, back under the round number 0.8 and is currently seen trading around 0.7990. Both the Australian Data came in negative with the Trade Balance dropping to 0.46 Billion from 0.89 Billion and the change in total value of Retail sales falling to 0.0% against the expected 0.2%

EURUSD stood almost flat currently seen trading at 1.1927 as the global investors remained on the side-lines ahead of the ECB's policy meeting. The Euro added a mere 0.1 percent against the US Dollar. The dollar index, which tracks the dollar against a basket of currencies, lost a little over 0.1% and is currently valued at 92.17.

Upcoming Events:

• 07:30 GMT – (GBP) Halifax HPI m/m
• 11:45 GMT – (EUR) Minimum Bid Rate
• 12:30 GMT – (CAD) Building Permits m/m
• 12:30 GMT – (EUR) ECB Press Conference
• 12:30 GMT – (USD) Unemployment Claims
• 14:00 GMT – (CAD) Ivey PMI
• 15:00 GMT – (USD) Crude Oil Inventories
• 23:00 GMT – (USD) FOMC Member Dudley Speaks
• 23:50 GMT – (JPY) Final GDP q/q

Asia Summary

Asian equity markets opened mostly higher with short term stability seen in US government on funding deal, gains overall remained muted as South Korea prepares for any action from the North. China was weaker, being dragged down by real estate names after S&P commented on the sector’s leverage.

US Senate reached a deal to keep the government funded to early December, after the US close a Republican congressional aide says in debt ceiling talks today there was no discussion of blocking the Treasury from using extraordinary measures.

Currencies were quiet for another session yen a little stronger, Aussie weaker after weaker than expected retail sales and trade surplus. PBOC again set the yuan mid-point rate stronger for the 9th consecutive setting and the longest run since 2011. It did skip OMO operations electing to use CNY298B in 1-yr medium-term lending facility, rate of 3.2% was left unchanged from prior. Mid-session financial press reported that there was a h.

Overnight Russia reiterated that tougher sanctions would not help the North Korea situation however today Japan PM Abe and South Korea President Moon held meeting and said they agree to seek maximum sanctions on North Korea. South Korea Vice Foreign Min Lim noted that the UN discussing banning North Korea exports of textiles and workers. South Korea confirmed it has set up four additional Thaad missile shields in addition to its regular two.

Key economic data

(AU) Australia Aug AiG Performance of Construction Index: 55.3 v 60.5 prior

(JP) Foreign investors net bought ¥1.35T in Japan bonds v bought ¥500.2B prior (3rd largest buy on record)

(AU) AUSTRALIA JULY RETAIL SALES M/M: 0.0% V 0.2%E

(AU) AUSTRALIA JULY TRADE BALANCE (A$): 460M V 1.0BE

Speakers and Press

China

(CN) S&P: China property developer margins are up, leverage unchanged but will moderately improve

(CN) China increases financial regulation to address risks (reference to ban on Initial Coin Offerings) - Xinhua

Korea

(KR) Moody's: If there was a short contained military conflict, the credit implications would be limited; Damage to sovereign credit profile would depend on length and intensity of any conflict

(KR) South Korea PM Lee: North Korea may launch missile on Sept 9th (reiteration)

(KR) Full artillery of the Thaad missile shield in South Korea will be ready for operation as soon as an internal process ends, this is 4 additional launches on top of the 2 already

(KR) US White House Official: Confirms to set aside for now consideration of terminating free trade agreement with South Korea

Other

USD/PHP (PH) Philippines Central Bank Gov Espenilla: Philippines to ease FX rules further this year, to streamline FX requirements

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.1%, Hang Seng +0.1%; Shanghai Composite -0.1%, ASX200 +0.1%, Kospi +1.1%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax +0.1%, FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1935-1.1919; JPY 109.26-108.89; AUD 0.8018-0.7984; NZD 0.7218-0.7195

Dec Gold +0.1% at $1,340/oz; Oct Crude Oil -0.2% at $49.06/brl; Sept Copper -0.3% at $3.15/lb

(CN) China PBOC skips OMO v CNY180B in 7 and 14-day reverse reports prior: net drains CNY100B v drains CNY40B prior

GLD SPDR Gold Trust ETF daily holdings -0.4% to 837.1 metric tonnes

(US) Weekly API Oil Inventories: Crude: +2.8M v -5.8M prior

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5269 V 6.5311 PRIOR (9th consecutive stronger setting, longest run since 2011)

(CN) China PBoC skips OMO v injects CNY40B prior in 7-day and 28-day reverse repos

(CN) PBOC conducts CNY298B v CNY360B prior in 1-yr MLF 3.2% v 3.2% prior in medium term lending facility (MLF) operations

(JP) Japan MoF sells ¥3.622T in 3-month bills; avg yield -0.2040% v -0.1463% prior; bid-to-cover 3.19x

JGB (JP) Japan MoF sells ¥658.3B in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.8320% v 0.8760% prior; Bid to cover: 3.67x v 3.90x prior

Equities notable movers

Australia/New Zealand

MBE.AU Launches AddGlu for Marketers a Predictive Customer Acquisition Platform for Digital Performance Marketing; +8.6%

Hong Kong/China

3383.HK Agile Property Holdings, +6.4%; 2007.HK Country Garden Holdings, +3.8% Both names move on broader real estate sector move

2313.HK Prices 52.1M shares at HK$58.60 v 58.50-60.50 expected range; -6.4%

For the 24 hours to 23:00 GMT, the AUD marginally rose against the USD and closed at 0.8007.

LME Copper prices declined 0.6% or $40.0/MT to $6864.0/MT. Aluminium prices declined 0.6% or $12.5/MT to $2069.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7989, with the AUD trading 0.22% lower against the USD from yesterday's close, following the release of dismal economic data from Australia.

Data indicated that Australia's AiG performance of construction index dropped to a level of 55.3 in August, following a reading of 60.5 in the previous month. Additionally, the nation's seasonally adjusted trade surplus surprisingly narrowed to A$460.0 million in July, from a revised surplus of A$888.0 million in the prior month. Market participants had anticipated for the country's trade surplus to widen to A$1000.0 million.

Moreover, the nation's seasonally adjusted retail sales surprisingly remained flat on a monthly basis in July, compared to market consensus for a gain of 0.2%. Retail sales had registered a revised rise of 0.2% in the previous month.

The pair is expected to find support at 0.7962, and a fall through could take it to the next support level of 0.7936. The pair is expected to find its first resistance at 0.8017, and a rise through could take it to the next resistance level of 0.8046.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

GBP/USD - 1.3043

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3048

Kijun-Sen level                    : 1.3051

Ichimoku cloud top              : 1.3006

Ichimoku cloud bottom        : 1.2977

Original strategy :

Buy at 1.2970, Target: 1.3070, Stop: 1.2935

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2980, Target: 1.3080, Stop: 1.2945

Position : -

Target :  -

Stop : -

As cable has retreated after rising to 1.3082 yesterday, suggesting minor consolidation below this level would be seen and pullback to 1.3005-10 cannot be ruled out, however, reckon downside would be limited to previous resistance at 1.2996 and the lower Kumo (now at 1.2977) should hold, bring another rise later, above said resistance at 1.3082 would signal recent rise from 1.2774 is still in progress and may extend gain to 1.3100, however, loss of near term upward momentum should prevent sharp move beyond 1.3140-50, risk from there is seen for a retreat to take place later.

In view of this, would not chase this rise here and would be prudent to buy cable on pullback as previous resistance at 1.2996 should limit downside and bring another rise. Below the Ichimoku cloud bottom (now at 1.2977) would defer and risk weakness to 1.2950 and possibly 1.2930 but only break of support at 1.2905-09 would signal top is formed.